Time value account: how to put the concepts to the test*.

*by Johannes Fiala, Lawyer (Munich), M.B.A. (Univ.Wales), M.M. (Univ.), Certified Financial and Investment Advisor (A.F.A.), EC Expert (C.I.F.E.), Banker (www.fiala.de)
Advice, insurance and plausibility: First of all, every intermediary should be aware that his own VSH insurance does not generally cover legal and tax advice (which is permitted as an ancillary business): Such tasks should be effectively delegated to insured professionals or cooperation partners for implementation. Then the plausibility of the concept has to be checked (cf. BGH judgement 13.01.2000, NJW-RR 1993, 1114). Afterwards it comes to the consulting situation, motto ?the more stupidly the customer, the more intensively the necessary consultation? ? and not to forget the documentation. Hardly any judge will allow the good faith of the intermediary to be an excuse for mistakes made by the intermediary.
The test: The agent can have the VSH broker show him what he is not insured for. The next step is to take a look at the advisory protocol form: Does it provide for the possibility of delegating specific (especially uninsured) activities to an advisor of the client?
Checked by specialists? While more respectable concepts often come along with a complaint-free IDW S4 auditor appraisal (seewww.anlegerschutzauskunft. de), other providers refer to alleged expert opinions of professors and commercial law firms.
The sample: Therefore, the question arises, which contract versions were tested here? And: What do the expert opinions look like in full text? These questions can help separate the wheat from the chaff.
Audited by tax office and health insurance? Some providers advertise with tables of positive examinations according to § 42 e EStG (call information at the tax office): But these lists are factually worthless, because this kind of examinations are only provisionally valid for the wage tax deduction (cf. FG Hamburg, decision of 11.5.05, Az. VI 295/03). If the initiator has told such or other ?gross nonsense? at a training event, he is of course liable for immoral damage (e.g. BGH ruling of 28.02.2005, Ref. II ZR 13/03).
The test: The employer should obtain a so-called binding information according to BMF letter of 29.12.2003 pp. from the tax office. In addition, the safest way is for the employees’ health insurance funds to also provide binding information in accordance with § 28 h SGB IV.
Example of an answer from the GKV from 2005: ? According to § 7d SGB IV, provisions must be made to ensure that the credit balance, including the employer’s share of the total social security contribution, is paid in the event of the employer’s insolvency. This is not the case with a pledge, as it only concerns the employee’s share. In the context of a trustee contract a protection can likewise not take place, since with a bankruptcy opening this contract is dissolved. ??
Examined by the bankruptcy judge? Among other things, an assignment is often agreed as security, which can prove to be completely worthless in retrospect. On the one hand, because securities “in the event of possible bankruptcy proceedings” are contractually null and void (cf. BGH judgements of 16.12.1957 and 06.02.1961). On the other hand, because insolvency courts always issue a prohibition according to § 21 I, II No.2 Insoaussprechen, without the consent of the preliminary insolvency administrator to dispose: No German trustee will want to oppose this prohibition.
Rehearsal: The intermediary should demand copies of ?expert opinions? to the contrary, also for the employer, as a full version, so that there is a liability debtor in case of emergency. In the doubt it is advised to let look through such advertising documents an independent specialist ? the costs (starting from good 200 euro to have) stand in no relation to the adhesion, because it can besides the reproach of an assistance to a criminal offence in the area stand.
The employer will wonder what it is paying trustee fees for as bankruptcy protection if the trustee’s ability to act is legally impossible. A scam? Examples of punishability risks The expert of a major bank sums up the legal risks of the management in case of omitted insolvency protection of credit balances after the introduction of § 7d SGB IV:
? Criminal liability according to § 266a StGB because of withholding of pay ? Civil liability of management towards social security institutions for unsecured social security contributions pursuant to sec. 823 para. 2 BGB in conjunction with §§ 266a, 14 StGB ? Civil law liability of the management towards the employees for unsecured credit balances according to § 823 para. 2 BGB i. V. m. § 7d SGB IV Which mediator, may already be treated by the public prosecutor as an accomplice or aider and abettor? Incidentally, the intermediary is then personally liable for all duties in case of doubt, incidentally in addition to the GGF as an additional liable debtor.
Our trustee helped develop the concept? In the event of insolvency, the trustee will receive the data from the ZWK provider in order to decide on the payment,’ it says at a training course. Then you can be almost sure that the trustee is not insured, probably the activity is not insurable at all. In the insurance conditions of the honorary professions it says ?insurance protection exists in accordance with ? AVB only for non-executive trustee activities. ? It depends decisively on whether the trustee is entitled to his own decision-making powers and discretionary powers? If the insurance cover does not fail due to this, then at the latest due to the following clause ??there is first of all the danger of a conflict of interests, if the trustee first acts as an advisor to the initiators in the same matter, and then represents possibly opposing interests of the trustors (these can be employers and employees) as their trustee. Insurance cover cannot be obtained for such trustee activities. The exercise of fiduciary activities ? is also always associated with the risk of unauthorised legal advice.? The wording politely suggests that numerous trust agreements turn out to be null and void after critical review.
Rehearsal: If you as an agent want to keep your commissions and above all not lose any customers, you should ask an experienced VSH insurance broker for an assessment and, if necessary, ask your own VSH insurer. There is a risk that there is no VSH coverage at all due to a “knowing breach of duty”. In the case of intentional offences, not only your own VSH insurer but also your own company legal protection will regularly refuse cover from the outset.
Domestic and foreign solutions: Domestically, there is not only the (often only alleged) insolvency protection via a trust solution, but also the surety insurance, the guarantee model as well as the pool account model.
Providers are credit institutions and some insurance companies. If you are looking for a trustee solution, you will also find legal models abroad. The trustee must be able to think ‘If insolvency proceedings are opened against a German limited company, I am just as interested in the legal aspects as if a bicycle were to fall over in Beijing’.
The test: both the insurance cover and the fiduciary risks must be manageable and transparent. The standard of review is international agreements and local law. Is the trustee able to disappear to Paraguay with the client’s money?
Status: 03.02.2006

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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